The Tata group seems to be on a buyback and consolidation spree in the post-pandemic corporate landscape. The latest is its announcement of buying back partner MarcoPolo’s share in its bus manufacturing joint venture (JV).
Tata will purchase the 49 per cent shareholding held by the Brazilian company for Rs 99.96 crore. Post the purchase, Tata Motors Marcopolo Limited (TMML) will become a wholly owned subsidiary of Tata Motors, with a non-competition clause with Marcopolo for three years.
TMML was formed in 2006 by the Tatas entering into a JV with Marcopolo, one of the biggest bus and coach manufacturers in the world. From its auto plants in Lucknow and Dharwad, it launched premium buses marketed under the ‘Starbus’ and ‘Starbus Ultra’ brand names, and had to face tough competition from rival Volvo. "As a consequence of its refreshed business strategy, Marcopolo has decided to exit from the JV and offered to sell its 49 per cent shareholding in the JV to the company,” said a statement released by Tata Motors on Thursday morning.
The bus venture is not the only partnership that the Tatas are re-evaluating. The group is reportedly planning to take over the operations of its low-cost airline AirAsia India in which it holds 51 per cent stake. One-time poster boy of the low cost airline boom, AirAsia, which holds the remaining 49 per cent, has been looking at exiting some of its JVs after being buffeted by the post-pandemic economic tailwinds.
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“Our business in Japan and India have been draining cash, causing the group much financial stress. Cost containment and reducing cash burns remain key priorities evident by the recent closure of AirAsia Japan and an ongoing review of our investment in AirAsia India," president (airlines) of AirAsia, Bo Lingam had said in a statement after unveiling quarterly results last month.
Indications are that Tata is energising a major push on the aviation side. Not only is it one of the frontrunners for buying the national carrier Air India, its taking over AirAsia India by hiking stake to 76 per cent could see major plays in the low-cost segment in India’s domestic aviation. This is because Air India, if the Tatas are successful in their bid, will also come with the profit-making low-cost subsidiary Air India Express. A merger of Air India Express and AirAsia India, perhaps under Tata branding, could become a formidable entity in the Indian market that can take on the present market leader (and low cost champ) Indigo.
There’s more. IT powerhouse Tata Consultancy Services (TCS) will open its share buyback programme on Friday (December 18), after the stock performed pretty well through the pandemic year and terrific results from the July-to-September quarter. The plan is to buyback 5.3 crore shares from the open market at Rs 3,000 per share—on Thursday afternoon, the share price was at Rs 2,819 rupees. The company has set aside Rs 16,000 crore for this exercise that will close on new year day.
